FAR Section: Converged Revenue Recognition Standards not to be Tested Until January 1, 2018

Published June 25, 2015

The AICPA, under the governance of its Board of Examiners (BOE), continually monitors the emerging standards of the profession and their eligibility for testing on the Uniform CPA Examination (“CPA Exam”). According to BOE policy, pronouncements are eligible for testing on the CPA Exam in the testing window beginning six months after their effective date. If early adoption is permitted, pronouncements are eligible for testing on the CPA Exam in the testing window beginning six months after their issuance date.

On May 28, 2014, the International Accounting Standards Board (the “IASB”) issued IFRS 15, Revenue from Contracts with Customers. As issued, IFRS 15 has an effective date of annual reporting periods beginning on or after January 1, 2017, and early adoption is permitted. On May 19, 2015, the IASB issued an Exposure Draft with a proposal to defer the effective date of IFRS 15 to annual reporting periods beginning on or after January 1, 2018, and to continue to permit early adoption.

On May 28, 2014, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update 2014-09 (“ASU 2014-09”), Revenue from Contracts with Customers. As issued, the amendments to the FASB Accounting Standards Codification in ASU 2014-09 are effective for annual reporting periods beginning after December 15, 2016 for public entities, and annual periods beginning after December 15, 2017 for all other entities. On April 29, 2015, the FASB issued a Proposed Accounting Standards Update with a proposal to defer the effective date of the amendments to the FASB Accounting Standards Codification in ASU 2014-09 to annual reporting periods beginning after December 15, 2017 for public entities, and annual periods beginning after December 15, 2018 for all other entities. The proposal would also permit entities to elect to early adopt the amendments to the FASB Accounting Standards Codification in ASU 2014-09 as early as annual reporting periods beginning after December 15, 2016.

The IASB and FASB proposals to defer the effective dates for their respective revenue recognition standards are primarily the result of the fact that their Joint Transition Resource Group for Revenue Recognition (“TRG”) has identified a series of implementation issues that will likely be resolved through the issuance of amendments to the revenue recognition standards.

In August 2014, the BOE announced that IFRS 15 would not be tested in the Financial Accounting and Reporting (“FAR”) section of the CPA Exam prior to January 1, 2016, and that the amendments to the FASB Accounting Standards Codification in ASU 2014-09 would continue to follow the CPA Exam Policy on New Pronouncements. Since the announcement in August 2014, the BOE has continued to monitor developments at the IASB, FASB and the TRG related to the implementation of the revenue recognition standards. Based on the proposed deferrals of the revenue recognition standards to address the implementation issues identified by the TRG, the BOE decided that the existing revenue recognition standards (IAS 18 and FASB Accounting Standards Codification Topic 605) will continue to be eligible for testing in the FAR section of the CPA Exam until January 1, 2018. Beginning on January 1, 2018 IFRS 15 and the amendments to the FASB Accounting Standards Codification in ASU 2014-09 will become eligible for testing in the FAR section of the Exam, and any existing content that is superseded by IFRS 15 and the amendments to the FASB Accounting Standards Codification in ASU 2014-09 will be retired.